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2021 (7) TMI 57 - AT - Income TaxLong term or Short term capital gain - holding period of asset - benefit of indexation - right in the asset - AO referred to the provisions of Section 2(47)(v) and came to the conclusion that as per the definition of transfer under the Income Tax Act, 1961, the transfer date of property is taken to be earlier of the date of registration of sale deed or part payment and possession of the property as per Section 53A of Transfer of Property Act - HELD THAT - Since the assessee in the instant case was allotted the property vide agreement Dated 11.04.2011 and allotment letter dated 08.07.2011, therefore, he has acquired a right in the asset and such right is a capital asset and payment of installments as per the terms is only a follow-up action and taking delivery of possession is only a formality. Therefore, the assessee in our opinion has correctly computed the long term capital loss. We, therefore, set aside the Order of the Ld. CIT(A) and direct the A.O. to allow the long term capital loss claimed by the assessee.
Issues Involved:
1. Treatment of the capital gain as long-term or short-term. 2. Levy of interest under section 234B of the Income Tax Act, 1961. 3. Levy of interest under section 234D of the Income Tax Act, 1961. 4. Initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Treatment of the capital gain as long-term or short-term: The primary issue was whether the gain from the sale of the immovable property should be treated as a long-term capital gain or a short-term capital gain. The assessee argued that the holding period should be considered from the date of the allotment letter (08.07.2011), which conferred a right to hold the property, and not from the date of the Conveyance Deed (20.10.2015). The Assessing Officer (A.O.) and the Commissioner of Income Tax (Appeals) [CIT(A)] treated the gain as short-term, considering the holding period from the date of the Conveyance Deed. The Tribunal found merit in the assessee's argument, relying on various judgments and CBDT Circulars No.471 and No.672, which clarify that the date of allotment is relevant for determining the holding period for capital gains. The Tribunal concluded that the right to hold the property was acquired on the date of the allotment letter, making the gain a long-term capital gain. Consequently, the Tribunal directed the A.O. to allow the long-term capital loss claimed by the assessee. 2. Levy of interest under section 234B of the Income Tax Act, 1961: The assessee challenged the levy of interest under section 234B. The Tribunal held that the levy of interest under section 234B is mandatory and consequential in nature. Therefore, this ground was dismissed. 3. Levy of interest under section 234D of the Income Tax Act, 1961: Similar to the previous issue, the assessee contested the levy of interest under section 234D. The Tribunal reiterated that the levy of interest under section 234D is also mandatory and consequential. Hence, this ground was dismissed as well. 4. Initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961: The assessee challenged the initiation of penalty proceedings under section 271(1)(c). The Tribunal deemed this ground premature at this juncture and dismissed it. Conclusion: The Tribunal partly allowed the appeal of the assessee. The key takeaway was the recognition of the holding period from the date of the allotment letter, thus treating the gain as a long-term capital gain. The other grounds related to the levy of interest and penalty proceedings were dismissed as they were either mandatory, consequential, or premature.
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